When it comes to income tax, the first attempt to impose it on America occurred during the War of 1812. After more than two years of war, then the federal government owed an unbelievable $100 million of debt. The government doubled the rates of its major source of revenue, customs duties on imports, which obstructed trade and ended up yielding less revenue than the previous lower rates in order to pay for this.

To think that the Revolution was started all because of Tea Texas in Boston.

During the war, excise taxes were imposed on goods and commodities, and housing, slaves and land were taxed. After the war ended in 1816, these taxes were repealed and instead high customs duties were passed to retire the accumulated war debt.

All about Taxable Income

The amount of income used to arrive at your income tax. Taxable income is your gross income minus all your adjustments, deductions, and exemptions.

Below are some specific taxes.

Estate Taxes.

Considered as one of the oldest and most common forms of taxation is the taxation of property held by an individual at the time of death.

There are still Estate Taxes in the US even though there are proposals to do away with them.

Such a tax can take the form, among others, of estate tax (a tax levied on the estate before any transfers). An estate tax refers to a charge upon the deceased’s entire estate, regardless of how it is disbursed. An alternative form of death tax is an inheritance tax (a tax levied on beneficiaries receiving property from the estate). Taxes imposed upon death provide incentive to transfer assets before death.

Estate Taxes are what Canada no longer has.

Most European countries have Estate Taxes, one prime example is Great Britain which has such high Estate Taxes that it has just about ruined the financial well-being of most of Britain’s Nobility which has been forced to sell vast Real Estate holdings over time.

Among others, such a tax can take the form of estate tax (a tax levied on the estate before any transfers). A charge upon the decedent’s entire estate, regardless of how it is disbursed, is an estate tax. Death tax has an alternative form and that is an inheritance tax or a tax levied on individuals receiving property from the estate. Upon death, the taxes imposed provide incentive to transfer assets before death.

Facts about Capital Gains Taxes

The increases in value of anything (including investments or real estate) that makes it worth more than the purchase price are called capital gains. It is likely that the gain may not be realized or taxed until the asset is sold.

Normally, capital gains are taxed at a lower rate than regular income to promote business or entrepreneurship during good and bad economic times.

Upon preparation of you taxes, decide if you want to itemize your deductions or take the standard deductions that are provided by the IRS.

Decisions, decisions…

Tax deductions are actually a very simple part of the tax reporting system. If you prepare your own taxes, then you know this isn’t true. Complicated tax forms can be a nightmare to fill out. The IRS enables you to take a standard deduction instead of having to itemize your deductions. So what do you think you should do?

The standard deduction is the easiest method because it requires no calculations or supporting documentation of any sort. You just determine your adjusted gross income and submit the amount for your classification. The amount would depend on whether you are a single, married, older than 65, or a person with kids.

Many people scoff at the mere idea of taking the standard deduction. This is actually a difficult decision to make. This is the best choice if you have a simple financial life and don’t have many deductions. It’s the best for you if you make $45,000 as an employee of a company, rent a house, and don’t have any major medical bills. But then, you can never be sure until you try itemizing your deductions.

Itemizing deductions involve just that. You must go through all your records and categorize the deductions. These deductions are then subtracted from your adjusted gross income to get a final figure from which tax is determined using the tax tables. It’s best to itemize if you have many tax deductions or tax credits. You could itemize it if you own a home. You would choose to itemize if you own a house, have significant medical bills, can claim tax credit, or have major losses. Obviously, there are other situations where itemizing makes sense, but this gives you an idea of the situation.

If you have a simple financial situation, claiming the standard deduction may be the answer. Itemizing will be better if your financial life is more complicated.

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